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SSI Back Pay Benefits: The Hard Part is Over…. Now the Restrictions Begin

Successful Supplemental Security Income (SSI) disability claimants, in addition to ongoing monthly benefits, also often receive large lump sum payments dating back to their application date. A disability claimant can receive a substantial amount of back pay simply because of the usually lengthy amount of time it takes for a claim to proceed from the application to a final decision. Claimants generally wait 100 days to receive an initial decision based on the information they put on their application. Because approximately 65% of claims are denied at the application stage, these claimants must file an appeal for reconsideration, which takes at least another two to three months, and sometimes even longer. If reconsideration is denied, then the claimant must file another appeal for a hearing before an Administrative Law Judge (ALJ). The wait for an ALJ hearing can take 12 to 18 months. So, it is easy to see how back pay benefits can add up to a significant amount while awaiting a final decision.

Successful child SSI claimants will have a designated representative payee. A child’s representative payee has several obligations. One of the most essential is ensuring the child is receiving all necessary medical care. If a representative payee does not seek necessary medical treatment, then the SSA will appoint a new representative payee for the child. The SSA strictly regulates how a representative payee spends the back pay for a child.

In general, the SSA pays back pay to the representative payee in three installments in six-month intervals. The first and second payments will be partial installments of roughly equal amounts—three times a claimant’s monthly benefit amount. The third (and final) installment will be for the remainder of the back pay. The payee may receive more money in the first and second installments if more money is needed to pay for medical care and other items or services that the SSA deems necessary for the child.

To begin receiving back pay, the representative payee must first create a dedicated bank account for the installments. Next, the payee should be prepared to keep a detailed record of the dedicated account. Because of the specific restrictions, the SSA places on how the back pay can be spent, the payee should have a record of how the money is spent in the event the SSA were to claim the payee violated the restrictions. It is SSA standard procedure to review the dedicated accounts on a yearly basis.

Specific restrictions apply to back pay benefits. Back pay benefits from the dedicated account may be used for the child’s medical treatment and educational or job skills training. Additionally, the SSA may allow the dedicated account funds to pay for the child’s personal needs, housing modifications, special equipment, therapy, and other items or services approved by the local SSA office. As a general rule, when the payee needs to identify whether an item or service is medically necessary, the payee should call the local SSA office and inform a field agent about the item or service. The field agent will then decide whether the SSA considers the item or service to be medically necessary on a case-by-case basis.

For example, a representative payee may want to buy a reliable car to take a child diagnosed with asthma and ADHD to and from doctor visits and other necessary medical care. To buy the car, the payee wants to use back pay benefits from the dedicated account. Because a car is likely not directly related to the child’s medical condition or educational needs, the representative payee should call the local SSA office and have the purchase approved before using the dedicated account funds.